TMI Blog2020 (6) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no exclusive transfer of the temporary shelter or the transmission tower/mast in favour of any one of the Mobile Telecommunication Operators. The space in the shelter and the transmission tower/mast is given on shared basis and charged separately therefore it would not come within the fold of the extended definition of saleSection 2(33) of the TNVAT Act, 2006. Thus, it is evident that wherever extended definition of sale in Article 366(29-A) are attracted the transaction can be taxed both under the provisions of TNVAT Act, 2006 and under the provisions of Finance Act, 1994. However, it is for Assessing Officers under the respective enactments to determine the value of the two transactions and collect tax - In the present case, no transfer of right to use goods as contemplated under Article 366(29-A) (d) and Section 2(33)(iv) of the TNVAT Act, 2006 is discernable. Even though the temporary shelter and the mast are goods within the means of Article 366(12) and Section 2(21) of TNVAT Act, 2006 yet there is no exclusive transfer to exclusion of others to attract the levy of transfer of right to use . The business model is not based on exclusivity. It is on a shared usage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following directions: The learned counsel appearing for the petitioner invited the attention of this Court to an earlier order dated 24.07.2014 in W.P.(MD)No.12123 of 2014 in the case of T.V.S.Sri Chakra Limited vs. Assistant Commissioner, Madurai, wherein, this Court after considering a similar case, directed instead of bank guarantee, the petitioner therein can furnish a personal bond. The petitioner has raised several grounds before the first respondent and he has pointed out that the petitioner has paid ₹ 2,50,313/- and ₹ 7,89,045/- respectively being 25% as ordered by the first respondent, the petitioner has paid ₹ 5,00,626/- and ₹ 15,78,090/- respectively which contains to 50% of the disputed tax and if the petitioner is directed to furnish bank guarantee for the remaining amount, he will be put to irreparable hardship as the petitioner is engaged in the business of providing infrastructural support services to telecom operators and under financial constraint due to heavy business competition. 7. Hence, this Court is of the view that the petitioner on deposit of 25% of disputed tax, should be directed to furnish a personal bond instead of ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2016 for the respective Assessment Years. 10. Thereafter, the impugned orders dated 29.07.2016 came to be passed by the 1st respondent for the respective assessment years. By the impugned orders, the 1st respondent has noted inter-state purchase of several goods from other states amounting to ₹ 1,54,46,232/- during the Assessment Year 2008-09 and ₹ 4,04,90,379/- for the Assessment Year 2009-10. 11. On the aforesaid interstate purchase, the 1st respondent has added 15% to arrive at the value of the deemed sale of ₹ 1,77,63,137/- and ₹ 4,65,63,936/-. 12. For the respective Assessment Years, the 1st respondent has re-determined the turnover ₹ 1,77,63,167.00 and ₹ 41,65,63,396.00 to demand tax that had allegedly escaped assessment on the deemed sale effected by the petitioner. 13. For the Assessment Year 2009-10, an additional amount of ₹ 4,89,672/- also has been demanded on the civil contract work carried out by the sub- contractor of the petitioner. Vide impugned orders, the 1st respondent has demanded tax and the penalty. Details of tax and penalty read as under:- Sl. No Subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the aforesaid refusal of the rectification application, demand notice dated 20.10.2016 has also been issued. Challenging the impugned orders dated 29.07.2016, the petitioner Ascend Telecom Infrastructure Pvt. Ltd. has filed the present Writ Petitions before this Court. 16. Petitioner has challenged the tax demanded primarily on the ground that the petitioner is a provider of Passive Infrastructure service for the Mobile Telecommunication Operators (MTO) which is outside the proviso of VAT. It is stated that the petitioner acquired such facilities from existing mobile telephone company and was started with view to reduce the cost of telecom service provided by them. 17. Assailing the impugned orders passed by the 1st respondent, it is the contention of the petitioner that the impugned orders have been passed pursuant to notices dated 14.03.2016 for the respective Assessment Years which do not contain any reasons and therefore, the impugned orders are violation of principal of natural justice and are contrary to law. It is further stated that the tax and the penalty have been increased without any notice and therefore, the impugned orders were liable to set aside. 18. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct finding, the re-assessing authority having regard to the nature of the equipment used and its fixation to the earth i.e., civil foundation or on the roof of the building for proper functioning and the nature of the activity that is being transferred to the customers viz., telecom companies to use the equipment i.e., the tower raised and in consideration petitioner receives some amount which are in the form of rents, has proposed tax under the provision of VAT Act, treating it as lease of movable. Further, having regard to the nature of the agreement entered into and the nature of transaction, the effective control is with the petitioner and, the component of delivery is also involved and the maintenance and over all control is also with the petitioner, it could be specifically said that the right to use the goods has been transferred by the petitioner to the telecom companies and that very much falls within Art. 366 (29 A) (d) of the Constitution. 25. He submitted that the view taken in the above case may not be correct and has been overruled in Indus Towers Ltd . Vs. DCCT , 2012 (285) ELT 3 (Kar). It is further submitted that the petitioner has paid service tax on the gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 34. We may notice that the concept of aspects theory which had found echoes in State of U.P. Another v. Union of India Anr. [(2003) 3 SCC 239] has expressly been overruled by a Three Judge Bench in Bharat Sanchar Nigam Ltd. (supra) stating : 78. But if there are no deliverable goods in existence as in this case, there is no transfer of user at all. Providing access or telephone connection does not put the subscriber in possession of the electromagnetic waves any more than a toll collector puts a road or bridge into the possession of the toll payer by lifting a toll gate. Of course the toll payer will use the road or bridge in one sense. But the distinction with a sale of goods is that the user would be of the thing or goods delivered. The delivery may not be simultaneous with the transfer of the right to use. But the goods must be in existence and deliverable when the right is sought to be transferred. 79. Therefore whether goods are incorporeal or corporeal, tangible or intangible, they must be deliverable. To the extent that the decision in State of U.P. v. Union of India held otherwise, it was, in our humble opinion erroneous. 35. For the reasons aforemention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssar Telecom Infrastructure (Pvt.) Ltd. , Vs. Union of India and Others , (2012) 52 VST 306 (Kar). ii. Antrix Corporation Ltd. Vs. Assistant Commissioner of Commercial Taxes, Bangalore and Others , (2010) 29 VST 308 (Kar.). iii. M/s.Rashtriya Ispat Nigam Ltd., Vs. The Commercial Tax Officer, Company Circle, Visakhapatnam and Another , 1989 SCC OnLine AP 413. iv. State of A.P Vs. Rashtriya Ispat Nigam Ltd. , (2002) 3 SCC 314. v. Idea Mobile Communication Limited Vs. Commissioner of Central Excise and Customs, Cochin , (2011) 12 SCC 608. vi. Vodafone Mobile Services Limited Vs. Commissioner of Service Tax, Delhi , 2018 SCC OnLine Del 12302. vii. Commissioner of Central Excise, Ahmedabad Vs. Solid and Correct Engineering Works and Others , (2010) 5 SCC 122. viii. Sirpur Paper Mills Limited Vs. Collector of Central Excise, Hyderabad , (1998) 1 SCC 400. ix. Federation of Hotel and Restaurant Association of India, Etc Vs. Union of India and Others , (1989) 3 SCC 634. x. Commissioner of Income Tax Vs. Arvind Investments Ltd., 1990 SCC OnLine Cal 376. xi. Bhagirath Ram Chand Vs. State of Punjab and Others , AIR 1954 PH 167. xii. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mast in favour of any one of the Mobile Telecommunication Operators. The space in the shelter and the transmission tower/mast is given on shared basis and charged separately therefore it would not come within the fold of the extended definition of saleSection 2(33) of the TNVAT Act, 2006. 40. The decision of Karnataka High Court in Antrix Corporation Ltd . Vs. Assistant Commissioner of Commercial Taxes, Bangalore and other, (2010) 29 VST 308 (Kar) was on a different issue altogether. There, the appellant had provided marketing and contract services for hiring transponders of INSAT satellites and was required to carry out certain activities on behalf of the Department of Space including billing of customer s collection of service and remittance, realization of payments against invoice raised on customers and providing service support for marketing INDAT/G-SAT space segment capacity both in local and global markets. There, it was concluded that there was a transfer of right to use the leased capacity under the contract of agreement executed by the Department of Space with the customers and the leased space segment capacity in a transponder of a satellite was goods within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of the Sales of Goods Act, 1930 for the purpose of levy of sales tax. 46. It further observed that of all the different kinds of composite transactions, the drafters of the Forty-sixth Amendment chose only three specific situations namely:- (a) a works contract; (b) a hire-purchase contract; and (c) a catering contract, to bring them within the fiction of a deemed sale. Of these three, the first and third involve a kind of service and sale at the same time. Apart from these two cases where splitting of the service and supply has been constitutionally permitted in sub-clauses ( b ) and ( f ) of clause (29-A) of Article 366, there is no other service which has been permitted to be so split. However, while making the above operation, the Court did not talk about Transfer of Right to Use in these two paragraphs. 47. It further observed that For example, the sub-clauses of Article 366(29-A) do not cover hospital services. Therefore, if during the treatment of a patient in a hospital, he or she is given a pill, can the Sales Tax Authorities tax the transaction as a sale? Doctors, lawyers and other professionals render service in the course of which can it be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than the project work of Rashtriya Ispat Nigam Ltd. In fact, the Division Bench of the A.P.High Court has very beautifully explained the concept of transfer of right to use in the following passage in Rashtriya Ispat Nigam Ltd. Vs. CTO , (1990) 77 STC 182, which reads as under: 9. The essence to transfer is passage of control over the economic benefits of property which results in terminating rights and other relations in one entity and creating them in another. While construing the word transfer due regard must be had to the thing to be transferred. A transfer of right to use the goods necessarily involves delivery of possession by the transferor to the transferee. Delivery of possession of a thing must be distinguished from its custody. It is not uncommon to find the transferee of goods in possession while transferor is having custody. When a Taxi cab is hired under Rent-a-car scheme and a cab is provided, usually driver accompanies the cab there the driver will be in custody of the car though the hirer will have the possession and effective control of the cab. This may be contrasted with the case when a taxi car is hired for going from one place to another ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated by us earlier in the following manner: (A) Goods do not include electromagnetic waves or radio frequencies for the purpose of Article 366(29-A)(d). The goods in telecommunication are limited to the handsets supplied by the service provider. As far as the SIM cards are concerned, the issue is left for determination by the assessing authorities. (B)There may be a transfer of right to use goods as defined in answer to the previous question by giving a telephone connection. (C)The nature of the transaction involved in providing the telephone connection may be a composite contract of service and sale . It is possible for the State to tax the sale element provided there is a discernible sale and only to the extent relatable to such sale. (D)The issue is left unanswered. (E)The aspect theory would not apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of the service. 54. The above view was concurred by Hon ble Dr.Justice A.R.Lakshmanan in para 97, which is extracted below. 97. To constitute a transaction for the transfer of the right to use the goods, the transaction must have the following at ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
